Jobs Told Google's Page to Cut Bloat to Avoid Becoming Microsoft
news.businessweek.com
news.businessweek.com
It seems Google are pruning a lot of stuff they must see as external to their core business, and putting happy-safe bubble wrap around services like search (see todays story about the + operator being depreciated to the dismay of advanced users).
I suppose this is Google trying to improve themselves, lets just hope they can execute as well as Apple when it comes to making super simplified products that people want.
A company's Return on Invested Capital is the ultimate measure of a company's valuation. it's not the PE, EPS, etc. Basically, ROIC is a measure of how efficient a company is in using its capital to generate returns. Warren Buffet uses ROIC to evaluate companies. Let's compare Apple and Google's ROIC. Apple's return on invested capital is 30.4% with a 5-year average of 26.1% despite Apple having lower gross profit margins compared to Google. a 30.4% ROIC is amazingly high for a "hardware company". Google's return on invested capital is only 18.3% with 5 year aveage of 17.2%. Why?
Different types of growth earn different degrees of return so not all growth is equally value-creating. Growth strategies based on organic new product development (ie. iPod, iPhone, iPad, iMac, etc.) frequently have the highest returns because they dont require much new capital. Apple can add new products to their existing factory lines and distribution systems, without much capital expenditure. The investments to produce new products are not all required at once. If preliminary results are not promising, future investments can be scaled back or canceled. Contrast this with Google's growth strategy of acquiring companies (Motorola, Youtube, Android, Doubleclick, etc.). Acquisitions require that the entire investment be made up front. The amount of up-front payment reflects the expected cash flows from the target company plus a premium to stave off other bidders. So even if Google can improve the target company enough to generate an attractive ROIC, the rate of return is typically only a small amount higher than its cost of capital. Factor in the additional traffic acquisition costs and costs of running hundreds of thousands of servers to support Google search, Youtube, Blogspot, GMail, etc. and you'll see why Google's return on invested capital is much lower compared to Apple. Google has a habit of wasting money on money-losing initiatives with low ROIC (Google's $280-million solar power initiative, self driving cars, etc.). Wall Street perceives the $12.5 Billion Moto acquisition as an expensive and inefficient use of capital that will further dilute the company's ROIC. Motorola's acquisition does not create or add value to Google. it actually destroys value, at least until Google recoups the $12.5 Billion acquisition cost. This is the reason why Apple is the most valuable company in the world. Meanwhile, Google's market cap's been stuck in the $170-$200B range for a couple of years now.
Here's the number one rule of conservation of value: anything that doesn't increase cash flows doesn't create value.
>> I posted this on another thread but I think it's worth repeating.
No soup for you!
Seriously, though: relax a little bit. You are still reasonably new to the site and need to get a better grasp of the rules.
For instance, you were so quick to try to respond to me that you couldn't wait for the system's "cool-off" period between responses. If you waited some 10 minutes, you would see a "reply" link under my answer, instead of forcing a break in the thread.
Or better yet: if you had taken the cool-off time, perhaps you would be able to realize that this discussion of ours is pointless, and that this back-and-forth only creates more noise.
This will be my last message on the matter. I hope you already had yours as well.
Your "ultimate measure" is questionable. It doesn't say whether a company is heading up or down in the sense of mindshare. You can have all the profits in the world and be heading down the drain (yahoo did this).
And mindshare is the only thing the supergiants (google, apple, amazon, facebook) really fight for.
According to the article, Jobs recommended to Page that Google focus on five services - I'm curious as to which services HN thinks are core to Google's growth and success? Off the top of my head: Search, Android, Chrome, Plus and YouTube.
[1] http://latimesblogs.latimes.com/technology/2011/04/exclusive...
Really, Apple telling Google to concentrate on services is like Google telling Apple to concentrate on hardware.
Google was iirc at some point involved in developing a little phone operating system that competed directly with one of Apple's cash cows. Naturally it would be great for Apple if google forgot about phones, Android and whatever else would cause them to one day run in to Apple in the marketplace.
If google would concentrate on search then that would be great news for Apple indeed.
Android is not a service, Chrome is not a service.
Search, YouTube and Plus are services.
It's an interesting balancing act that can sometimes go against the very grain of tech companies, especially one the size of Google. Everything we as mere mortals in the tech business are taught is to try things, fail quickly, iterate.
Jobs approach was to do a few things and do them well. Indeed, he felt the most important thing one could do, as an agent of change in that type of role, was to learn to effectively say no. http://www.youtube.com/watch?v=FF-tKLISfPE
Page has always been very smart and a phenomenal software engineer, but his new role is different. I believe Page finds himself in a somewhat similar position to Jobs in 1997, and it will be very interesting to see how he does as a technology leader.
Jobs returned to Apple after a 10+ year hiatus. So, while returning to his roots, they were not the same team he had left behind. He had to reconstruct much of the company's management structure, which he felt was fraught with engineering mismanagement. (Saw an interview with Jobs from back then, but can't seem to find the source of those comments now.)
Page, in assuming the role as head of the company earlier this year, was taking ownership of a management team and organization that had largely been put in place by Schmidt (remember when he was needed for "adult supervision"). While Page was certainly there during that duration, he also didn't have direct responsibility for the rest of the organization. It's not an exact parallel, but Page certainly had a new organization from when he gave up the reins a decade ago. (And, he quickly responded by re-aligning several key management members).
But more so than environmental, it is the state of product development in Google I find most similar.
Jobs inherited a company that was spinning its wheels on various ideas, but not doing anything particularly well. Any vision the company held was certainly not reflected in the products it brought to the marketplace.
Page inherits a situation where, outside of search, Google doesn't do anything particularly well. I don't mean they suck, just that their product offering isn't much of a differentiator from competitors, or provides a compelling experience for users. I'm sure arguments can be made to counter my subjective opinion, but there are no product or services from Google that rivals the popularity of it's web search.
Referring back to Jobs's 1997 WWDC speech, it was about setting the bar for finding exactly what they should be working on, without regard to whether something had traction or if it was a good technical idea. I believe Page has to make those very same considerations right now.
First of all, Eric Schmidt did an excellent job. In 2011, Page inherited a that is hugely profitable, practically owns search, and has successfully expanded into many other markets. While there's no doubt that he'll do many things differently, you can pretty much guarantee it's not going to be anything on the order of the massive purges Apple experienced in the late 90s. Apple in 1997 was mortibund; almost nobody thought Jobs had a serious chance at turning it around.
Schmidt successfully did for Page and Brin what John Sculley was supposed to do for Jobs; provide guidance for an inexperienced founder until they can assume the chief executive role.
And while I agree with much of what you wrote, I take exception to the idea that, outside of search, Google 'doesn't do anything particularly well'. They have a range of excellent and successful products, most of them well integrated into their core business. I refuse to accept the idea that, for example, Maps, Gmail and Android aren't products 'done well'.
My comment about Google and there other products is that they don't do anything exceedingly well over the competition outside of search. It's not that their products aren't done well, they just don't differentiate the company. Maps, as you point out, is a fine product -- but there are other map products that are just as good. Gmail vs. other web-based mail? Android vs. iOS? While fine products, they don't put Google head-and-shoulders above the market.
By comparison, nearly every product offered by Apple is considered best-in-class. The iPod. The iPhone. The iPad. The iMac desktops & laptops.
To be sure, achieving was Apple has achieved is no small matter, even for the bright minds at Google. And, it's not to say that if they don't reach that point, Page's tenure as CEO amounts to failure. But, I believe the expectations are for Google to achieve some of that best-in-class dominance, because of their position in search.
"Nike makes some of the best products in the world. Products that you lust after. But you also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff."
Dropping products, even crappy ones, that produce revenue is difficult when investors demand non-stop growth, quarter after quarter, and your employees are afraid of losing their jobs or political fiefdoms.
http://www.youtube.com/watch?v=3LEXae1j6EY#t=07m33s till 9:20
(And also demonstrates his reality distortion field, which his questioner heroically overcomes.)
So this is the URL you want: http://www.youtube.com/watch?v=3LEXae1j6EY#t=13m10s. It doesn't work with the HTML5 version of YouTube though. Is it technically not possible?
Yeah, they're misusing the spec. If they wanted to be clever, and use "#" to index the video instead of the page, they should have omitted the "t=", to look like "#13m10s". At least that would make sense. But oh no, they had to bastardize it into some hideous hybrid chimera of crossed specs.</grump>
BTW: it was a real question - did my variant work for your browser?
Both didn't work in Safari if it doesn't have Flash. I think it used to when I had Flash installed, so it's probably only the HTML 5 version that wouldn't work?
Which browser are you using?
Yeah, sounds like a HTML5 bug; they'll probably fix it soon. Flash is a well-established platform, so I'd be surprised if it didn't work in it. Does youtube's HTML5 version work in Chrome?
FF2 in linux (long story for why I can't upgrade this machine)
After reading http://news.ycombinator.com/item?id=35079, I always expect to be educated on HN :)
BTW: Awesome thread.
The 'just buy more stock' was probably part joke and part personal gain. If you truly believe this is going to be good for the company, then you would believe the stock price will rise in the long term. Why not show your confidence to the insiders and make a buck out of it.
One area where I hope Google doesn't follow Apple is in engineering culture. For instance, isn't it true that most of the engineers who worked on the original iphone literally never even saw one until it was unveiled to the public? Whether or not the "bottom up" opportunities for engineers to influence products at Google is as effective as a top down culture under the likes of Jobs and Ives is debatable, but it sure seems like working at Google is a lot more fun! (disclosure: I worked at Google, am basing my impressions on what it's like to work at Apple on anecdotes and only a couple of direct accounts from engineers who have worked there).
For the core team, my understanding is "no". The core team was very small, though (<50 software engineers).
His meetings with record labels are kind of legendary for this very reason.
They seem to show some improvement lately, but Microsoft still looks very much like middle-management realms, a tentacular corporation with little movement and even less focus.
Quite simply Google could never could never replicate Microsoft's culture because there never was a time when when a large enough fraction of employees had fuck you money. Microsoft's culture is different by virtue of the fact that venture capital has never had much of a say.
Hence a positive vision of "a computer on every desk" rather than a mere admonition to not "be evil".
Google's stated mission is "organize all the world's information", considerably bolder than "a computer on every desk".
So they productively employ some fraction of those people (I'd guess, conservatively, less than half), and they pseudo-productively distract the rest with poorly managed fool's errands. And don't think it's a case of "you don't know until you try" - in most cases, everybody knows. General Managers will seize on any misguided idea with enough plausible deniability in order to build their fiefdoms.
It's like a bizarre kind of welfare system for the upper middle class. A few people do amazing work and ship great products. For the majority, the most significant thing they accomplished was passing the hiring gauntlet. But they all get to live in big houses and drive BMWs.
An institution can work on the whole, but still be grossly inefficient.
2. "welfare for the upper middle class" is a perfect description of middle-management.
Apple isn't perfect.
The rockbox UI structure can be a bit cumbersome to learn because there is a lot of functionality there, but I've never found anything else that comes close.
Honestly, if no-one beats me to it, one day I'll write my own Android music player that works the way I want. The spec's been solid in my head for years, it's just that's the first platform I've had which would make that a practical possibility. With falling smartphone and memory card prices and improving battery life, the days of the standalone MP3 player are severely numbered.
quotation marks mean that you are making an exact quote, so you want an exact match.
Consider:
1. Hey, do you know anything about cars? Yeah, I have a fine automobile.
2. Hey, do you know anything about "Cars"? Yeah, it was a cute movie.